• Private sector

Private sector accountability

This paper explores the role of the private sector and the conditions of the birth of a national bourgeoisie in the Arab world. Traditionally, the oil-exporting rentier states of the Middle East do not depend on taxation and the private sector is often only an extension of the state on which it depends for contracts, import licenses and the like. In fact, the private and public sector do not have distinctive roles: the largest companies remain state-owned while private companies are family businesses with close ties to the state.

However, strong population growth requires job creation and the private sector's role in employment is considerable. Also, the private sector is increasingly capable of investing in ambitious projects that compete on international markets. As inter-arab investments have gained importance, governments have to compete to attract new projects.

Given this newly gained weight, the private sector demands greater accountability, transparency and political reform. It should continue to encourage reform measures in areas that directly reflect on its interests such as judicial reforms. This is particularly true in three domains:

• financial markets. Private family owned companies are reluctant to enter the stock market. This is due to their relative distance from the capital markets and problems in access to loans from banks
• knowledge society and excellence initiatives. The private sector in the Arab world has difficulties in
• accessing the necessary know-how for its modernisation process. It should therefore play an active
• role in education, notably in vocational training
• Public Private Partnerships (PPP) have developed as an important alternative forprivatisation
  

As the private sector has a role to play beyond ensuring return to its traditional stakeholders, it should take further action to emerge as a national bourgeoisie:

• establishing non-political associations or task forces to represent civil society
• issue initiatives and act as a partner of the government to establish effective reform measures
• audit and request more transparency in government initiatives

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